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Skype is upgrading its popular Internet telephone service to add video calling and a toolbar for Microsoft Outlook to find and dial contacts with a click.

The long-promised "2.0" edition was launched Thursday by Skype, which was acquired last month by Internet auctioneer eBay Inc. for an eye-popping $2.6 billion.

While the Windows download is available to any user, the application is actually a Beta version, meaning the company is still tweaking the software into a final edition. Skype did not provide a timetable for the final edition or the planned release of a version for the Macintosh operating system from Apple Computer Inc.

The video feature will not cost extra, so Skype's trademark computer-to-computer calls will remain free (Fees apply to calls to traditional and cell phones).

Users would need to attach a digital camera to their computers, though some laptops hitting the market have built-in cameras. To that end, Skype also announced partnerships to sell webcams made by Logitech International SA and Creative Labs Inc.

The new edition of Skype also features a new search box to type in names or numbers and pull up matching entries in the user's address book, as well as an installable toolbar to perform the same function within the Outlook e-mail program from Microsoft Corp.

The upgrade also includes more features and personalization options such as ring tones and special icons to let others see a user's mood on their buddy lists.

Skype has been demonstrating the new video calling capability since earlier this year.

The launch comes two weeks after Sony announced a Skype-like free Internet phone service with an emphasis on video conferencing.

Internet portals such as Yahoo and Time Warner's AOL have long offered a video option with their instant-messaging services, though usage is not widespread.

Security Concerns

eBay?s acquisition of Skype has put the free P2P service in the limelight. However, not all this attention has been of the positive kind. According to the Canada-based Info-Tech Research Group big enterprises should refrain from using Skype as the service has some serious security and compliance shortcomings such that even a rookie hacker can pose a serious threat to a company?s network.

Butler Group, which is a UK-based analyst firm, has stated that computers on the Skype P2P network can be used as virtual PBXs. This will affect their speed, performance, and bandwidth consumption.